Breaking News: IRS Has Delayed Tax Day to July 15 and Phase 2 Relief

IRS has delayed Tax Day to July 15

As directed by President Trump, all individuals and businesses will have this additional time to file and make payments.

Taxpayers that are entitled to a refund are encouraged to file as soon as possible so money can be sent out.

In addition to pushing the filing deadline back to July 15, the bill would also extend the due date for estimated payments to October 15, 2020, and would treat all estimated payments due through October 15, 2020, as "one installment due on such date,” eliminating the need to write separate checks for the skipped April and July estimated payment dates.

Phase 2 of Coronavirus Economic Response

Families First Coronavirus Response Act

On Wednesday, March 18th, the federal government passed the Families First Coronavirus Response Act, which goes into effect April 2, 2020. Among other provisions, including the specification that this health emergency qualifies as a disaster for employee disaster relief payments, the Act includes new paid leave provisions directed to employers and self-employed individuals as well as tax credits to at least partially reimburse employers. Those latter provisions are discussed here. We expect this Act to be followed by additional legislation for direct assistance to individuals and businesses.

Emergency Paid Sick Leave

Employers with fewer than 500 employees are required to provide two weeks (80 hrs) of paid sick leave for employees who are unable to work (or telework) due to a list of COVID-19 related conditions including quarantines, caring for someone else who is sick, or if a child’s school has been closed. If the reason behind the leave is due to the employee’s own testing, diagnosis, or quarantine, then the rate is capped at $511 per day or $5,110 aggregate per employee. If the employee is caring for someone else in that position or due to childcare, then the rate is capped at $200 per day and $2,000 aggregate per employee. 

Emergency Family and Medical Leave

For employers with fewer than 500 employees, the Act expands FMLA to require employers to provide 12 weeks of leave if an employee is unable to work (or telework) due to the need to care for a child when school or childcare is unavailable due to a COVID-19 public health emergency. The first two weeks are unpaid but would be covered by emergency sick leave above. The following ten weeks must be paid at a rate of no less than two-thirds of the employee’s regular rate. 

Any employee who has been employed at least 30 calendar days is eligible. Ordinarily, FMLA only applies to employers with more than 50 employees, so this may be new to employers under that amount. There are exceptions for certain health care providers and for employers with fewer than 50 employees if that employer can demonstrate that it would jeopardize the business’s ability to survive. 

The regulations also state that no mandated paid leave would be available under the FMLA expansion act, the paid sick leave act, or any other provision of the Families first act solely because a business closes, furloughs, or lays off employees during the pandemic

Tax Credits

Wages paid under the above provisions would not be subject to the employer portion of Social Security payroll tax. Employers can claim a refundable credit on their payroll tax returns for the emergency sick leave up to the caps listed above and for up to $200 per individual per day up to 10,000 for expanded FMLA leave. Self-employed individuals do not file payroll tax returns for themselves. Those individuals will receive the same credit on their annual income tax returns. 

We will follow up with information on additional legislation as it is formally passed into law. As we write this, legislators are discussing phase 3 of the economic response packages. If you have any questions, please contact our office at (225) 927-6811.

Sincerely, 

Faulk & Winkler, LLC

Baton Rouge, Louisiana